Demon mulls US float

DEMON, Britain's largest internet connection provider, is set to make its market debut later this year. Its move comes hard on the heels of rival Easynet's announcement last week that it would float on the Alternative Investment Market in March.

Demon is likely to give the UK stock market a wide berth, however, and opt for New York's Nasdaq over-the-counter market - where high-tech firms are more highly valued - to raise funds for expansion of its 60,000 customer base.

"We are talking to US and UK financial advisers currently," said Cliff Stanford, Demon's founder. "No final decision has been made. But it is more than likely the London stock market will not be the right place to float a company like this."

Easynet, Britain's third largest connector to the World Wide Web with nearly 5,000 subscribers last week announced plans to raise pounds 2m through the AIM flotation in March.

David Rowe, Easynet's chairman, said the move would allow "the British public to own their bit of the electronic superhighway". He added: "The pounds 2m raised will take us to being the second, third or fourth largest Internet provider in Europe. We have opened in France and are targeting expansion in Germany."

Unipalm, the other main UK Internet provider that claims 20,000 telephone telephone dial-up customers, gave up its independence last Autumn when it was bought by US counterpart UUNet for pounds 97m. UUNet unveils third-quarter figures tomorrow.

Unipalm's founder Peter Dawe is on record as saying he would have a done far better if he had floated his group in the US rather than the UK, as the price might have been even higher.

At this stage of Internet development, providers certainly need cash. Demon is no exception and is likely to need a financial injection by the end of 1996 at the latest to cope with subscriber demand and European expansion in Holland, France and Spain.

It raised pounds 5.5m through a private placing last August, and Mr Stanford estimates that the number of subscribers is growing by 8 per cent a month. Subscribers pay a flat pounds 10 plus VAT a month for unlimited access to the Internet. Next month, Demon will add 1,000 new modems to the existing 2,500 in its UK operation so that users will avoid getting the frustrating engaged tone when they try to "surf" the Net.